Exhibit 1
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Waban Inc.
6-1/2% Convertible Subordinated Debentures due 2002
STANDBY PURCHASE AGREEMENT
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June 6, 1997
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PRUDENTIAL SECURITIES INCORPORATED
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Waban Inc., a Delaware corporation (the "Company"), and BJ's Wholesale
Club, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company
("BJI"), hereby confirm their agreement with you (the "Purchaser"), as set forth
below.
1. Securities. The Company proposes to call for redemption at the
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close of business on July 7, 1997 (the "Redemption Date") all of its outstanding
6-1/2% Convertible Subordinated Debentures due 2002 (the "Securities") at the
redemption price of 102.889% of the principal amount thereof, plus accrued
interest from July 1, 1997 to the Redemption Date, for an aggregate redemption
price of $1,029.9733 per $1,000 principal amount of Securities. The Securities
were issued pursuant to an indenture, dated as of July 1, 1992 (the
"Indenture"), between the Company and First Trust, National Association, as
successor to Continental Bank, National Association, as trustee (the "Trustee"),
and are convertible thereunder into shares of the Company's Common Stock, par
value $0.01 per share ("Common Stock") at the conversion price of $24.75 per
share (equivalent to a conversion ratio of 40.404 shares of Common Stock per
$1,000 principal amount of Security) at any time prior to June 26, 1997 (the
"Expiration Date").
To assure the availability of a portion of the funds necessary to
effect the proposed redemption of the Securities, the Company desires to make
arrangements pursuant to which the Purchaser will, following the Expiration Date
and subject to the terms and conditions herein contained, purchase a number of
shares of Common Stock equal to the number of shares of Common Stock that would
have been issuable upon conversion of the Excess Securities (as defined below).
The term "Excess Securities" as used in this Agreement shall mean the aggregate
principal amount of Securities in excess of $53,474,000 that are not duly
surrendered for conversion prior to 6:00 P.M., Eastern time, on the Expiration
Date. Notwithstanding anything to the contrary in this Agreement, in no event
shall the Purchaser be obligated to purchase more than 2,160,606 shares of
Common Stock pursuant to this Agreement. The shares of Common Stock that would
have been issuable upon conversion of the Excess Securities are hereinafter
referred to as the "Shares", and the Shares, together with all other shares of
Common Stock issuable upon conversion of the Securities, are hereinafter
referred to as the "Conversion Shares".
2. Representations and Warranties of the Company and BJI. The
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Company and BJI hereby jointly and severally represent and warrant to, and agree
with, the Purchaser that:
(a) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"). A registration
statement on such Form (File No. 333-25511-01) with respect to the
Conversion Shares and any sale by the Purchaser of any shares of Common
Stock acquired by it hereunder, including a form of final prospectus, has
been prepared and filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Act. BJI meets the requirements for
use of Form S-1 under the Act. A registration statement on such Form (File
No. 333-25511) with respect to the tax-free distribution of all outstanding
shares of common stock, par value $.01 per share, of BJI ("BJI Common
Stock") held by the Company that may be distributed by the Company in the
form of a special dividend to holders of Common Stock on a one-for-one
basis (the "Distribution"), including a form of final prospectus, has been
prepared and filed by BJI with the Commission under the Act. Such
registration statement of the Company on Form S-3 and of BJI on Form S-1
have been filed on a combined basis, and such registration statement
includes a proxy statement of the Company to be used in connection with the
solicitation of proxies by the Company's Board of Directors from holders of
Common Stock for use at the annual meeting of stockholders of the Company
to be held on July 10, 1997 (the "Stockholders' Meeting"). As used in this
Agreement, the term "Registration Statement" means such combined
registration statement and proxy statement of the Company and BJI, as
amended at the time when the registration statement is declared effective,
including (A) all financial schedules and exhibits thereto and (B) all
documents incorporated by reference therein filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the term
"Prospectus" means each of the prospectuses of the Company and BJI first
filed with the Commission pursuant to Rule 424(b) under the Act or, if no
prospectus is required to be filed pursuant to said Rule 424(b), such term
means each of the prospectuses included in the Registration Statement, in
either case including all documents incorporated by reference therein filed
under the Exchange Act and including the proxy statement/prospectus of the
Company included in the Registration Statement. Any reference in this
Agreement to an "amendment or supplement" to the Prospectus or an
"amendment" to any registration statement (including the Registration
Statement) shall be deemed to refer to and include any document
incorporated by reference therein that is filed with the Commission under
the Exchange Act after the date of the Prospectus or registration
statement, as the case may be. For purposes of the preceding sentence, any
reference to the "effective date" of an amendment to a registration
statement shall, if such amendment is effected by means of the filing with
the Commission under the Exchange Act of a document incorporated by
reference in such registration statement, be deemed to refer to the date on
which such document was so filed with the Commission.
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(b) When the Registration Statement or any amendment thereto is
declared effective, it (i) will contain all statements required to be
stated therein in accordance with, and will comply in all material respects
with the requirements of, the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder and (ii) will not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When
the Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or such amendment
or supplement is not required to be so filed, when the Registration
Statement or the amendment thereto containing such amendment or supplement
to the Prospectus is declared effective) and on the Expiration Date, the
Redemption Date, the Closing Date and on the date when the Prospectus is
otherwise amended or supplemented, the Prospectus, as amended or
supplemented at any such time, (i) will contain all statements required to
be stated therein in accordance with, and will comply in all material
respects with the requirements of, the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder and (ii) will
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in the Registration Statement or any amendment thereto or
the Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by the
Purchaser specifically for use therein.
(c) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing under
the laws of their respective jurisdictions of incorporation and are duly
qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability, as the
case may be, to the Company and its subsidiaries taken as a whole, or BJI
and its subsidiaries taken as a whole. BJI is a wholly owned subsidiary of
the Company.
(d) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus; and each of the Company and BJI has full
power (corporate and other) to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by it.
(e) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned beneficially by the Company free and clear
of any security interests, liens, encumbrances, equities or claims.
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(f) Each of the Company and, on a pro forma basis, BJI has an
authorized, issued and outstanding capitalization as set forth in the
Prospectus. All of the issued shares of capital stock of each of the
Company and BJI have been duly authorized and validly issued and are fully
paid and nonassessable. The Conversion Shares, including the Shares, have
been duly authorized and reserved for issuance by the Company upon either
conversion of the Securities or issuance to the Purchaser hereunder. The
Conversion Shares, including the Shares, when issued by the Company upon
either conversion of the Securities or issuance to the Purchaser hereunder,
and, in the case of the Shares, after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. No holders
of outstanding shares of capital stock of the Company are entitled as such
to any preemptive or other rights to subscribe for any of the Conversion
Shares, and no holder of securities of the Company has any right which has
not been fully exercised or waived to require the Company to register the
offer or sale of any securities owned by such holder under the Act in the
public offering contemplated by this Agreement.
(g) The capital stock of each of the Company and BJI conforms to
the description thereof included or incorporated by reference in the
Prospectus.
(h) Except as disclosed in the Prospectus, and except for options
and stock-based awards granted under the Company's 1989 Stock Incentive
Plan and 1995 Director Option Plan after March 31, 1997 and shares issued
upon exercise of outstanding options, there are no outstanding (A)
securities or obligations of the Company or any of its subsidiaries
convertible into or exchangeable for any capital stock of the Company or
any such subsidiary, (B) warrants, rights or options to subscribe for or
purchase from the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(i) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included or incorporated by
reference in the Registration Statement and the Prospectus fairly present
the financial position of the Company and its consolidated subsidiaries and
the results of operations and changes in financial condition as of the
dates and periods therein specified. The consolidated financial statements
and schedules of BJI and its consolidated subsidiaries included in the
Registration Statement and the Prospectus fairly present the financial
position of BJI and its consolidated subsidiaries and the results of
operations and changes in financial condition as of the dates and periods
therein specified. All such financial statements and schedules have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the captions
"Selected Historical Financial Data of Waban" and "Selected Historical
Financial Data of BJI" in the Prospectus and under the
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caption "Selected Financial Data" in the Company's Annual Report on Form
10-K for the fiscal year ended January 25, 1997 (the "Form 10-K"), fairly
present, on the basis stated in the Prospectus and such Form 10-K, the
information included therein. The pro forma financial statements and
information of each of the Company and BJI included or incorporated by
reference in the Registration Statement and the Prospectus comply as to
form with the applicable requirements of the Act, the Exchange Act and the
rules and regulations thereunder, have been prepared based on the
historical financial statements of the Company and BJI, respectively and
all pro forma adjustments thereto are based on reasonable good faith
estimates and judgments of management which fairly and accurately reflect
the items for which such adjustments are made and have been properly
applied to the historical amounts in the compilation of such statements and
information.
(j) Coopers & ▇▇▇▇▇▇▇ L.L.P., who have (a) certified certain
financial statements of the Company and its consolidated subsidiaries, (b)
certified certain financial statements of BJI and its consolidated
subsidiaries and (c) delivered their reports with respect to the audited
consolidated financial statements and schedules included and incorporated
by reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the Act, the Exchange Act and
the related published rules and regulations thereunder with respect to each
of the Company and BJI.
(k) The execution and delivery of this Agreement have been duly
authorized by each of the Company and BJI and this Agreement has been duly
executed and delivered by each of the Company and BJI, and is the valid and
binding agreement of each of the Company and BJI, enforceable against the
Company and BJI, respectively, in accordance with its terms.
(l) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of
the Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein, and no such proceedings have been threatened against the
Company or any of its subsidiaries or with respect to any of their
respective properties; and no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that is not described therein or
filed as required.
(m) The call of the Securities for redemption, the conversion or
redemption thereof, the issuance of the Conversion Shares, including the
Shares, the sale of the Shares to the Purchaser by the Company pursuant to
this Agreement, the offering and resale of the Shares by the Purchaser, the
compliance by each of the Company and BJI with the other provisions of this
Agreement, the Securities and the Indenture, the Distribution and the
consummation of the other transactions contemplated herein and in the
Registration Statement and the Prospectus with respect to the Distribution
and
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the repayment of the Company's 9.58% unsecured senior notes due May 31,
1998 (the "Senior Notes") and the retirement (through open market or
privately negotiated purchases or a tender offer) or defeasance of the
Company's 11% senior subordinated notes due May 15, 2004 (the "Senior
Subordinated Notes") do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, the declaration of
effectiveness of the registration statement on Form 8-A with respect to the
BJI Common Stock (the "BJI Form 8-A"), the listing of the Shares on the New
York Stock Exchange, Inc. (the "NYSE"), such as may be required under state
securities or blue sky laws and, if the registration statement filed with
respect to the Securities (as amended) is not effective under the Act as of
the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, or (ii) conflict
with or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any indenture (including the Indenture),
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective properties are bound,
or the charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to the Company or any of its subsidiaries, except that (i) a
waiver is needed under the Company's credit agreement with bank lenders
dated as of April 4, 1995, as amended (the "Credit Agreement") to effect
the foregoing transactions (other than the call of the Securities for
redemption, the conversion thereof, the issuance of the Conversion Shares,
including the Shares, the sale of the Shares to the Purchaser by the
Company pursuant to this Agreement, the offering and resale of the Shares
by the Purchaser and the compliance by each of the Company and BJI with the
other provisions of this Agreement), and (ii) the Company must repay its
Senior Notes and retire or defease its Senior Subordinated Notes to
consummate the Distribution and other transactions contemplated by the
Registration Statement (other than the call of the Securities for
redemption, the conversion thereof, the issuance of the Conversion Shares,
including the Shares, the sale of the Shares to the Purchaser by the
Company pursuant to this Agreement, the offering and resale of the Shares
by the Purchaser and the compliance by each of the Company and BJI with the
other provisions of this Agreement).
(n) The Securities are convertible into Common Stock at a
conversion price of $24.75 per share based on the principal amount of the
Securities (equivalent to a conversion ratio of 40.404 Shares per $1,000
principal amount of Security). As of the close of business on June 5, 1997,
no more than $106,949,000 aggregate principal amount of the Securities were
outstanding; the call for redemption and the redemption or conversion of
all of the outstanding Securities have been duly authorized by all
necessary corporate action on the part of the Company; upon the mailing of
the notice of redemption and expiration of conversion right (the "Notice of
Redemption"), a copy of the form of which is included in the Registration
Statement, in accordance with the Indenture, notice
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of redemption of all of the Securities shall have been duly given, all
outstanding Securities shall have been duly called for redemption on the
Redemption Date, and the right to convert the Securities into shares of
Common Stock will, as a result of such call, expire at 6:00 P.M., Eastern
time, on the Expiration Date; and the Indenture and the Securities have
been duly authorized, executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
(o) Neither the Company nor BJI has taken or will take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate conversion of the Securities, the sale or resale of the
Shares or the sale by the Purchaser of any other shares of Common Stock
acquired by the Purchaser during the course of the transactions
contemplated hereby.
(p) Neither the Company nor BJI has paid or given, nor will pay or
give, directly or indirectly, any commission or other remuneration for
soliciting purchases of the Securities, for soliciting the conversion of
Securities into Common Stock or for soliciting another to purchase any
other securities of the Company.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding and there has not
been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), management, business prospects, net worth, or results of
operations of the Company and its subsidiaries, taken as a whole, except in
each case as described in or contemplated by the Prospectus.
(r) On and after the date hereof and prior to the close of business
on the Closing Date (as hereinafter defined), there will be no change in
the outstanding capital stock of the Company, except for the issuance of
Common Stock upon conversion of the Securities and except for options and
stock-based awards granted under the Company's 1989 Stock Incentive Plan
and 1995 Director Option Plan after March 31, 1997 and shares issued upon
exercise of outstanding options.
3. Purchase, Sale and Delivery of the Shares. On the basis of the
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representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth:
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(a) If any Securities have not been duly surrendered for conversion
prior to 6:00 P.M., Eastern time, on the Expiration Date, and provided that
the aggregate principal amount of Securities that have not been duly
surrendered for conversion prior to 6:00 P.M., Eastern time, on the
Expiration Date exceeds $53,474,000, the Company agrees to issue and sell
to the Purchaser, and the Purchaser agrees to purchase from the Company,
such number of Shares as would have been issuable upon conversion of the
Excess Securities, at a purchase price of $26.296 per Share.
Notwithstanding anything to the contrary in this Agreement, in no event
shall the Purchaser be obligated to purchase more than 2,160,606 Shares
pursuant to this Agreement. The Company shall notify the Purchaser of such
number of Shares as soon as practicable after the expiration of
convertibility on the Expiration Date and in no event later than 9:30 A.M.,
New York City time, on the first business day following the Expiration
Date. One or more certificates in definitive form for the Shares, and in
such denomination or denominations and registered in such name or names as
the Purchaser requests upon notice to the Company at least 48 hours prior
to the Closing Date, shall be delivered by or on behalf of the Company to
the Purchaser, against payment by the Purchaser of the purchase price
therefor by wire transfer of same-day funds to an account designated in
writing by the Company, which designation shall be made at least 48 hours
prior to the Closing Date. Such delivery of and payment for the Shares
shall be made at the offices of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 9:30 A.M., New York City time, on
July 7, 1997, or at such other place, time or date as the Purchaser and the
Company may agree upon, such time and date of delivery against payment
being herein referred to as the "Closing Date". The Company will make such
certificate or certificates for the Shares available for checking and
packaging by the Purchaser at the offices in New York, New York of the
Company's transfer agent or registrar or of the Purchaser at least 24 hours
prior to the Closing Date.
(b) As compensation for the commitment of the Purchaser hereunder,
the Company agrees to pay to the Purchaser, by wire transfer of same-day
funds to an account designated by the Purchaser, an amount equal to the sum
of (i) a standby fee equal to 2,160,606 (representing the maximum number of
Shares that may be purchased from the Company by the Purchaser pursuant to
this Agreement) multiplied by $0.41 per share, and (ii) a takedown fee
equal to the aggregate number of Shares purchased by the Purchaser pursuant
to this Agreement, multiplied by an amount equal to $0.99 per share. Such
compensation shall be paid to the Purchaser (i) if the Purchaser is
required to purchase any Shares, on the Closing Date, or (ii) otherwise, as
soon as practicable after the Expiration Date (but in no event later than
two business days thereafter).
(c) It is understood that the Purchaser may offer for sale and sell
the Shares, and Conversion Shares acquired through the purchase and
conversion of Securities, from time to time, both on or prior to and after
the Redemption Date, in one or more transactions on the NYSE or otherwise,
at market prices prevailing at the time of sale, at prices relating to such
prevailing market prices
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or at negotiated prices. Nothing contained herein shall limit the right of
the Purchaser, in its sole discretion, to determine the price or prices at
which, or the time or times when, any Shares or any Conversion Shares
acquired through the purchase and conversion of Securities shall be sold,
whether or not prior to the Redemption Date and whether or not for long or
short account.
4. Covenants of the Company and BJI. The Company and BJI covenant
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and agree with the Purchaser that:
(a) The Company and BJI will use their respective best efforts to
cause the Registration Statement, and any amendments thereto, to become
effective as promptly as possible. If required, the Company and BJI will
file the Prospectus and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act. During any time when a prospectus relating to the Conversion
Shares is required to be delivered under the Act, each of the Company and
BJI (i) will comply with all requirements imposed upon it by the Act and
the Exchange Act and the respective rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Conversion Shares, and (ii) will not file with the
Commission any prospectus referred to in Section 2(a) hereof, any amendment
or supplement to any such prospectus or any amendment to the Registration
Statement of which the Purchaser shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Purchaser shall not have given its
consent. Each of the Company and BJI will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon request by the Purchaser or counsel for the Purchaser, any
amendments to the Registration Statement or amendments or supplements to
the Prospectus that may be necessary or advisable in connection with the
distribution of the Shares by the Purchaser, and will use its best efforts
to cause any such amendment to the Registration Statement to be declared
effective by the Commission as promptly as possible. The Company will
advise the Purchaser, promptly after receiving notice thereof, of the time
when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto
has been filed and will provide evidence satisfactory to the Purchaser of
each such filing or effectiveness. The Company will comply with Rules 153
and 153a of the Act, and pursuant to Rule 153 will deliver to the NYSE, for
redelivery to members of such exchange, such number of copies of the
Prospectus and any amendment or supplement thereto as such exchange may
reasonably request.
(b) Each of the Company and BJI will advise the Purchaser, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any order
directed at any document incorporated by reference in the Registration
Statement or the Prospectus or any amendment or supplement thereto or any
order preventing or
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suspending the use of any preliminary prospectus or the Prospectus or any
amendment or supplement thereto, (ii) the suspension of the qualification
of the Conversion Shares for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding for any
such purpose or (iv) any request made by the Commission for amending the
Registration Statement, for amending or supplementing the Prospectus or for
additional information. Each of the Company and BJI will use its best
efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(c) The Company will arrange for the qualification of the
Conversion Shares for offering and sale under the securities or blue sky
laws of such jurisdictions as the Purchaser may designate and will continue
such qualifications in effect for as long as may be necessary to complete
the distribution of the Conversion Shares, provided, however, that in
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connection therewith the Company shall not be required to qualify as a
foreign corporation or to execute a general consent to service of process
in any jurisdiction.
(d) If, at any time prior to the final date when a prospectus
relating to the Conversion Shares is required to be delivered under the
Act, any event occurs as a result of which the Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if for any other reason it is necessary at any time to amend
or supplement the Prospectus to comply with the Act, the Exchange Act or
the respective rules or regulations of the Commission thereunder, the
Company will promptly notify the Purchaser thereof and, subject to Section
4(a) hereof, will prepare and file with the Commission, at the Company's
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or
effects such compliance.
(e) Each of the Company and BJI will, without charge, provide to
the Purchaser and to counsel for the Purchaser a signed copy of the
registration statement originally filed with respect to the Conversion
Shares and each amendment thereto (in each case including exhibits
thereto), certified by the Secretary or an Assistant Secretary of each of
the Company and BJI to be true and complete copies thereof as filed with
the Commission by electronic transmission, and so long as a prospectus
relating to the Conversion Shares is required to be delivered under the
Act, as many copies of the Prospectus or any amendment or supplement
thereto as the Purchaser may reasonably request.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Purchaser a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
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(g) Each of the Company and BJI will not, directly or indirectly,
from the date hereof through the date that is 180 days after the Redemption
Date, without the prior written consent of the Purchaser, (i) offer,
pledge, sell, offer to sell, contract to sell, grant any option to purchase
or otherwise sell or dispose (or announce any offer, pledge, sale, offer of
sale, contract of sale, grant of any option to purchase or other sale or
disposition) of any shares of its common stock or other capital stock or
any securities convertible into, or exchangeable or exercisable for, shares
of its common stock or other capital stock (whether such shares or any such
securities are now owned by the Company or BJI or hereafter acquired),
except (A) pursuant to this Agreement, (B) for issuances contemplated by
the Prospectus, (C) for issuances pursuant to the exercise of employee
stock options outstanding on the date hereof or pursuant to the terms of
convertible securities, options or warrants of the Company outstanding on
the date hereof and (D) for grants of options and stock-based awards under
the Company's 1989 Stock Incentive Plan, 1997 Stock Incentive Plan and 1995
Director Option Plan, or (ii) enter into any swap or arrangement that
transfers to another, in whole or in part, any of the economic consequences
of ownership of its common stock or other capital stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
physical delivery of common stock or other capital stock or other such
securities, in cash or otherwise.
(h) The Company will mail or cause to be mailed, not later than the
close of business on the date hereof, the Notice of Redemption in the form
submitted to the Purchaser, together with a copy of the Prospectus and
related letter of transmittal, to the registered holders of the Securities
as of such date in the manner required by the terms of the Securities. The
Company will not, and will ensure that the Trustee does not, withdraw or
revoke the Notice of Redemption or attempt to do so.
(i) Each of the Company and BJI will obtain the agreements
described in Section 6(f) hereof prior to the Closing Date.
(j) The Company will direct the Trustee to advise the Purchaser
daily of the number of Securities surrendered for conversion or redemption
on the preceding day.
(k) The Company will not, directly or indirectly, take any action
that would result in an adjustment of the conversion price of the
Securities from that set forth in Section 1 hereof.
(l) Each of the Company and BJI will, not later than three weeks
after the Redemption Date, file a post-effective amendment to the
Registration Statement or take such other steps as may be necessary to
remove from registration all Conversion Shares that have not been issued.
(m) If at any time during the period commencing on the date on
which the Registration Statement becomes effective and ending on the date
that
11
is 25 days after the Redemption Date, any rumor, publication or event
relating to or affecting the Company or BJI shall occur as a result of
which in the opinion of the Purchaser the market price of the Common Stock
has been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), each of the Company and BJI will, after written notice
from the Purchaser advising it to the effect set forth above, forthwith
prepare, consult with the Purchaser concerning the advisability of a press
release or other public statement responding to or commenting on such
rumor, publication or event.
5. Expenses. The Company and BJI will pay all costs and expenses
--------
incident to the performance of their obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions contemplated herein and in the Registration Statement and the
Prospectus, including any costs of printing the registration statement
originally filed with respect to the Conversion Shares and the BJI Common Stock
and any amendment thereto and the Prospectus and any amendment or supplement
thereto, this Agreement and any blue sky memoranda, (ii) all arrangements
relating to the delivery to the Purchaser of copies of the foregoing documents,
(iii) the redemption of the Securities, including any costs of printing and
mailing the Notice of Redemption and related letter of transmittal, (iv) the
fees and disbursements of any conversion agent, communication or solicitation
agent and the counsel, accountants and any other experts or advisors retained by
the Company, (v) preparation and issuance of the Conversion Shares and delivery
to the Purchaser of any certificates evidencing the Shares, including transfer
agent's and registrar's fees and all transfer taxes as may be imposed on the
Purchaser in connection with its purchase of Securities pursuant hereto, (vi)
the qualification of the Conversion Shares under state securities and blue sky
laws, including filing fees and fees and disbursements of counsel for the
applicable, the National Association of Securities Dealers, Inc. relating to the
Conversion Shares and the BJI Common Stock, (viii) advertising relating to the
redemption of the Securities and offering of the Shares (other than as shall
have been specifically approved by the Purchaser) and (ix) one-half of all out-
of-pocket expenses (including fees and disbursements of counsel for the
Purchaser) that shall have been incurred by the Purchaser in connection with the
purchase and sale of the Shares, up to a maximum of $50,000 (it being understood
that such $50,000 represents one-half of out-of-pocket expenses of $100,000 or
more). Notwithstanding the foregoing clause (ix), if the sale of the Shares
provided for herein is not consummated because any condition to the obligation
of the Purchaser set forth in Section 6 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 10 hereof or because of any failure,
refusal or inability on the part of either the Company or BJI to perform all
obligations and satisfy all conditions on their respective parts to be performed
or satisfied hereunder other than by reason of a default by the Purchaser, the
Company and BJI agree, jointly and severally, to reimburse the Purchaser upon
demand for all out-of-pocket expenses (including fees and disbursements of
counsel for the Purchaser) that shall have been incurred by the Purchaser in
connection with the proposed
12
purchase and sale of the Shares. Neither the Company nor BJI shall in any event
be liable to the Purchaser for the loss of anticipated profits from the
transactions covered by this Agreement.
6. Conditions of the Purchaser's Obligations. The obligations of
-----------------------------------------
the Purchaser to surrender for conversion Securities and to purchase and pay for
any Shares shall be subject, in the Purchaser's sole discretion, to the accuracy
of the representations and warranties of each of the Company and BJI contained
herein as of the date hereof and as of the Expiration Date, the Redemption Date
and the Closing Date, as if made on and as of the Expiration Date, Redemption
Date and the Closing Date, respectively, to the accuracy of the statements of
the officers of each of the Company and BJI made pursuant to the provisions
hereof, to the performance by each of the Company and BJI of its covenants and
agreements hereunder and to the following additional conditions:
(a) The Registration Statement shall have been declared effective
not later than 5:00 P.M., New York City time, on the date hereof or such
later time as the Purchaser and the Company may agree upon; if required,
the Prospectus and any amendment or supplement thereto shall have been
filed with the Commission in the manner and within the time period required
by Rule 424(b) under the Act; no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement or any post-effective amendment thereto or the
Prospectus or any amendment or supplement thereto shall have been issued
and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company, BJI or the Purchaser, shall
be contemplated by the Commission; and each of the Company and BJI shall
have complied with any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or
otherwise).
(b) On each of the effective date of the Registration Statement
and the Closing Date, the Purchaser shall have received an opinion, dated
such respective date, of ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Company and
BJI, to the effect that:
(i) each of the Company and BJI has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and is duly
qualified to transact business as a foreign corporation and is in
good standing under the laws of the Commonwealth of
Massachusetts;
(ii) each of the Company and BJI has corporate power to own
or lease its properties and conduct its business as described in
the Registration Statement and the Prospectus, and each of the
Company and BJI has corporate power to enter into this Agreement
and to carry out all the terms and provisions hereof and thereof
to be carried out by it;
13
(iii) each of the Company and BJI has an authorized
capitalization as set forth in the Prospectus; the Conversion
Shares, including the Shares, have been duly authorized and
reserved for issuance by all necessary corporate action of the
Company upon either conversion of the Securities or issuance to
the Purchaser hereunder; the Conversion Shares, including the
Shares, when issued by the Company upon either conversion of the
Securities or issuance to the Purchaser hereunder, and, in the
case of the Shares, paid for by the Purchaser pursuant to this
Agreement, will be validly issued, fully paid and nonassessable;
the Conversion Shares, including the Shares, have been duly
authorized for listing, subject to official notice of issuance,
on the NYSE (provided that this opinion need not be rendered on
the effective date of the Registration Statement); to the
knowledge of such counsel, no holders of outstanding shares of
capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Conversion
Shares, including the Shares; and to the knowledge of such
counsel no holders of securities of the Company are entitled to
have such securities registered under the Registration Statement;
(iv) the statements set forth under the headings
"Information for Holders of Convertible Debentures," "Description
of BJI Capital Stock" and "Description of Waban Capital Stock" in
the Prospectus, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company or BJI,
are correct in all material respects; and the statements set
forth under the headings "The Distribution--Federal Income Tax
Aspects of the Distribution" and "--Conditions; Termination,"
"BJI Business and Properties--Legal Proceedings," "HomeBase
Business and Properties--Legal Proceedings," "Information for
Holders of Convertible Debentures" included in the Prospectus,
and under the heading "Legal Proceedings" in the Company's Form
10-K, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, are
correct in all material respects;
(v) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of each of the
Company and BJI and this Agreement has been duly executed and
delivered by each of the Company and BJI;
(vi) to such counsel's knowledge, no legal or governmental
proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company
or any of the Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are
not described therein, and no such proceedings have been
threatened against the Company or any of the Subsidiaries or with
respect to any of their respective properties; and to such
counsel's knowledge, no contract or other
14
document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(vii) the call of the Securities for redemption, the
conversion or redemption thereof, the issuance of the Conversion
Shares, including the Shares, and the sale of the Shares to the
Purchaser by the Company pursuant to this Agreement, the offering
and resale of the Shares by the Purchaser, the compliance by each
of the Company and BJI with the other provisions of this
Agreement, the Securities and the Indenture, the Distribution and
the consummation of the other transactions contemplated herein
and in the Registration Statement and the Prospectus with respect
to the Distribution and the repayment of the Company's Senior
Notes and the retirement (through open market or privately
negotiated purchases or a tender offer) or defeasance of the
Company's Senior Subordinated Notes do not (A) require on the
part of the Company, BJI or any of their respective subsidiaries
the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such
as have been obtained, the declaration of effectiveness of the
BJI Form 8-A, the listing of the Shares on the NYSE and such as
may be required under state securities or blue sky laws, or (B)
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any
indenture (including the Indenture), mortgage, deed of trust,
lease or other agreement or instrument, filed as an exhibit to
the Registration Statement or the Company's Form 10-K, or the
charter documents or by-laws of the Company or BJI, or any
statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator known to
such counsel and applicable to the Company or BJI, except that
(i) a waiver is needed under the Credit Agreement to effect the
foregoing transactions (other than the call of the Securities for
redemption, the conversion or redemption thereof, the issuance of
the Conversion Shares, including the Shares, the sale of the
Shares to the Purchaser by the Company pursuant to this
Agreement, the offering and resale of the Shares by the Purchaser
and the compliance by each of the Company and BJI with the other
provisions of this Agreement), and (ii) the Company must repay
its Senior Notes and retire or defease its Senior Subordinated
Notes to consummate the Distribution and other transactions
contemplated by the Registration Statement (other than the call
of the Securities for redemption, the conversion thereof, the
issuance of the Conversion Shares, including the Shares, the sale
of the Shares to the Purchaser by the Company pursuant to this
Agreement, the offering and resale of the Shares by the
Purchaser, the compliance by each of the Company and BJI with the
other provisions of this Agreement);
(viii) the call for redemption and the redemption or
conversion of all of the outstanding Securities have been duly
authorized by all
15
necessary corporate action on the part of the Company, and, upon
the taking by the Company of such actions as shall be specified
in such counsel's opinion, notice of redemption of the Securities
shall have been duly given, all outstanding Securities shall have
been duly called for redemption on the Redemption Date and the
right to convert the Securities into shares of Common Stock will
expire on the Expiration Date; and the Indenture and the
Securities have been duly authorized, executed and delivered by
the Company and constitute legal, valid and binding obligations
of the Company enforceable against the Company in accordance with
their respective terms;
(ix) the Registration Statement is effective under the
Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto and no order directed at
any document incorporated by reference in the Registration
Statement or the Prospectus or any amendment or supplement
thereto has been issued, and no proceedings for that purpose have
been instituted or are threatened by the Commission; and
(x) the Registration Statement originally filed with respect
to the Conversion Shares and each amendment thereto and the
Prospectus (in each case, including the documents incorporated by
reference therein but not including the financial statements and
other financial information contained therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act,
the Exchange Act and the respective rules and regulations of the
Commission thereunder.
Such counsel shall also state that no facts have come to its attention
leading it to believe that the Registration Statement (excluding financial
statements and schedules, the notes thereto and other financial,
statistical and accounting data included therein, as to which no belief
need be expressed), as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus (excluding financial statements and
schedules, the notes thereto and other financial, statistical and
accounting data included therein, as to which no belief need be expressed),
as of its date or the date of such opinion, included or includes any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
16
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date
of such opinion.
(c) On each of the effective date of the Registration Statement and
the Closing Date, the Purchaser shall have received an opinion, dated such
respective date, of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel for the Company, to
the effect that:
(i) each of the Company's subsidiaries listed in Schedule 1
hereto (the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of its respective jurisdiction of incorporation and is duly
qualified to transact business as a foreign corporation and is in
good standing under the laws of all other jurisdictions where the
ownership or leasing of its respective properties or the conduct
of its respective business requires such qualification, except
where the failure to be so qualified does not amount to a
material liability or disability, as the case may be, to the
Company and its subsidiaries taken as a whole, or BJI and its
subsidiaries taken as a whole;
(ii) each of the Subsidiaries has corporate power to own or
lease its respective properties and conduct its respective
business as described in the Registration Statement and the
Prospectus;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned beneficially by the
Company or another Subsidiary free and clear of any perfected
security interests or, to the best knowledge of such counsel, any
other security interests, liens, encumbrances, equities or
claims;
(iv) all of the issued shares of capital stock of each of the
Company and BJI have been duly authorized and validly issued and
are fully paid and nonassessable and were not issued in violation
of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; and
(v) no legal or governmental proceedings are pending to
which the Company or any of the Subsidiaries is a party or to
which the property of the Company or any of the Subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein, and,
to the knowledge of such
17
counsel, no such proceedings have been threatened against the
Company or any of the Subsidiaries or with respect to any of
their respective properties; and no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
18
Such counsel shall also state that no facts have come to her attention
leading her to believe that the Registration Statement (excluding financial
statements and schedules, the notes thereto and other financial,
statistical and accounting data included therein, as to which no belief
need be expressed), as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus (excluding financial statements and
schedules, the notes thereto and other financial, statistical and
accounting data included therein, as to which no belief need be expressed),
as of its date or the date of such opinion, included or includes any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date
of such opinion.
(d) On each of the effective date of the Registration Statement and
the Closing Date, the Purchaser shall have received an opinion, dated such
respective date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Purchaser, with respect to the issuance and sale of the Shares to the
Purchaser, the Registration Statement and the Prospectus, and such other
related matters as the Purchaser may reasonably require, and the Company
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(e) On each of the date hereof, the effective date of the
Registration Statement and the Closing Date, the Purchaser shall have
received from Coopers & ▇▇▇▇▇▇▇ L.L.P. a letter, dated such respective
date, in form and substance satisfactory to the Purchaser, to the effect
that:
(i) they are independent accountants with respect to each of
the Company and its consolidated subsidiaries and BJI and its
consolidated subsidiaries within the meaning of the Act, the
Exchange Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules of the Company and BJI examined by them
and included or incorporated by reference in the Registration
Statement and
19
the Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act, the Exchange Act
and the related published rules and regulations thereunder;
(iii) on the basis of a reading of the latest available interim
unaudited consolidated condensed financial statements of the
Company and its consolidated subsidiaries, a reading of the
unaudited amounts for total revenues, cost of sales, including
buying and occupancy costs, selling, general and administrative
expenses, interest on debt and capital leases (net), income
before income taxes and total and per share amounts of net income
for the four-week period ended May 31, 1997 and of the unaudited
consolidated financial statements of the Company and its
consolidated subsidiaries for the periods from which such amounts
are derived, carrying out certain specified procedures (which do
not constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal
matters of significance with respect to the comments set forth in
this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof
of the Company and each of its consolidated subsidiaries, and
inquiries of certain officials of the Company and its
consolidated subsidiaries who have responsibility for financial
and accounting matters, nothing came to their attention that
caused them to believe that:
(A) with respect to any Form 10-Q of the Company that is
incorporated by reference in the Registration Statement, the
unaudited consolidated condensed financial statements of the
Company and its consolidated subsidiaries included or
incorporated by reference in the Registration Statement and the
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act, the Exchange
Act and the related published rules and regulations thereunder,
or are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited consolidated financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus;
(B) the unaudited amounts for total revenues, cost of sales,
including buying and occupancy costs, selling, general and
administrative expenses, interest on debt and capital leases
(net), income before income taxes and total and per share amounts
of net income included or incorporated by reference in the
Registration Statement and the Prospectus do not agree with the
amounts set forth in any unaudited consolidated financial
statements for those same periods or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the corresponding amounts
in the audited consolidated financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus; and
20
(C) at a specific date not more than five business days
prior to the date of such letter, there were any changes in the
capital stock or long-term debt and obligations under capital
leases of the Company and its consolidated subsidiaries or any
decreases in total current assets or stockholders' equity of the
Company and its consolidated subsidiaries, in each case compared
with amounts shown on the April 26, 1997 unaudited consolidated
condensed balance sheet included in the Registration Statement
and the Prospectus, or for the period from April 27, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the prior year, in total revenues, income
before income taxes or total or per share amounts of net income
of the Company and its consolidated subsidiaries or in net sales
or operating income of the HomeBase Division or the Warehouse
Club Division, except in all instances for changes, decreases or
increases set forth in such letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company, BJI and their
respective consolidated subsidiaries and are included in the
Registration Statement and the Prospectus, in the Company's Form
10-K incorporated by reference in the Registration Statement and
the Prospectus or in the Company's Quarterly Report on Form 10-Q
for the 13-week period ended April 26, 1997 to be incorporated by
reference in the Registration Statement and the Prospectus, and
have compared such amounts, percentages and financial information
with such records of the Company and its consolidated
subsidiaries and BJI and its consolidated subsidiaries and with
information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation;
and
(v) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included or
incorporated by reference in the Registration Statement and the
Prospectus, carrying out certain specified procedures that would
not necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (v), inquiries of
certain officials of the Company and its consolidated
subsidiaries who have responsibility for financial and accounting
matters and proving the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the
unaudited pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that
the unaudited pro forma consolidated condensed financial
statements do not comply in form in all material respects with
the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
such statements.
21
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Purchaser that (A) such letters shall be accompanied by
a written explanation of the Company and/or BJI as to the significance
thereof, unless the Purchaser deems such explanation unnecessary, and (B)
such changes, decreases or increases do not, in the sole judgment of the
Purchaser, make it impractical or inadvisable to proceed with the purchase
and delivery of the Shares as contemplated by the Registration Statement,
as amended as of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (e) with respect to any letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(f) On each of the date hereof, the effective date of the
Registration Statement and the Closing Date, the Purchaser shall have
received a certificate, dated such respective date, of the Chief Executive
Officer and Chief Financial Officer of the Company, in their capacities as
such, to the effect that:
(i) the representations and warranties of the Company or
BJI, as applicable, in this Agreement are true and correct as if
made on and as of the date of such certificate; the Registration
Statement, as amended as of the date of such certificate, does
not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading, and the Prospectus, as amended or supplemented as
of the date of such certificate, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and the Company or BJI, as applicable, has performed all
covenants and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to such date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto
and no order directed at any document incorporated by reference
in the Registration Statement or the Prospectus or any amendment
or supplement thereto has been issued, and no proceedings for
that purpose have been instituted or, to the best knowledge of
the Company or BJI, as applicable, are threatened by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, neither the Company nor BJI, as applicable, nor any
of their respective subsidiaries has sustained any material loss
or interference with their respective businesses or properties
from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and there has not been any
22
material adverse change, or any development involving a
prospective material adverse change, in the condition (financial
or otherwise), management, business prospects, net worth or
results of operations of the Company and its subsidiaries, taken
as a whole, except in each case as described in or contemplated
by the Prospectus.
(f) On the date hereof, the Purchaser shall have received from each
person who is a director or executive officer of the Company an agreement
dated the date hereof to the effect that such person will not, directly or
indirectly, from the date hereof through August 13, 1997, without the prior
written consent of the Purchaser, (i) offer, pledge, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise sell or dispose
(or announce any offer, pledge, sale, offer of sale, contract of sale,
grant of an option to purchase or other sale or disposition) of any shares
of the Company's or BJI's common stock or other capital stock or any
securities convertible into, or exchangeable or exercisable for, shares of
the Company's or BJI's common stock or other capital stock (whether such
shares or any such securities are now owned by such director or executive
officer or hereafter acquired), or (ii) enter into any swap or arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Company's or BJI's common stock or other
capital stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by physical delivery of common stock or other
capital stock or other such securities, in cash or otherwise.
(g) Prior to the Purchaser purchasing and paying for any Shares on
the Closing Date, the Company and BJI shall have entered into a
registration rights agreement (the "Registration Rights Agreement") with
the Purchaser having terms and provisions, and in form and substance, in
all respects satisfactory to the Purchaser and counsel to the Purchaser
pursuant to which BJI shall grant to the Purchaser demand registration
rights, exercisable immediately upon execution of the Registration Rights
Agreement, which demand registration rights shall require BJI to (a) use
its best efforts to file with the Commission as soon as possible and have
declared effective as soon as possible thereafter a "shelf" registration
statement on an appropriate form under the Act covering all shares of BJI
Common Stock that the Purchaser might receive as a result of Purchaser's
purchase of Shares pursuant to this Agreement and the occurrence of the
Distribution, (b) use its best efforts to maintain such shelf registration
statement in effect for so long as may be required for Purchaser to sell
any and all shares of BJI Common Stock that it might receive pursuant to
the Distribution and (c) pay all costs and expenses incident to the
performance of its obligations under the Registration Rights Agreement,
including without limitation all costs and expenses incident to the filing
fees of the Commission and the National Association of Securities Dealers,
Inc. relating to the BJI Common Stock and all out-of-pocket expenses
(including fees and disbursements of counsel for the Purchaser) that shall
be incurred by the Purchaser in connection therewith.
23
(h) On or before the Closing Date, the Company shall have obtained
an agreement or agreements from the banks party to the Credit Agreement
expressly permitting the Company to redeem the Securities and to consummate
the transactions contemplated by this Agreement.
(i) On or before the Closing Date, the Purchaser and counsel for
the Purchaser shall have received such further certificates, documents or
other information as they may have reasonably requested from each of the
Company and BJI.
All opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory to the Purchaser and counsel for the Purchaser. Each
of the Company and BJI shall furnish to the Purchaser such conformed copies of
such opinions, certificates, letters and documents in such quantities as the
Purchaser and counsel for the Purchaser shall reasonably request.
7. Indemnification and Contribution. (a) The Company and BJI
--------------------------------
jointly and severally agree to indemnify and hold harmless the Purchaser and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the Act or Section 20 of the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which the Purchaser or such controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company or BJI in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or
any amendment or supplement thereto, executed by the Company or
BJI or based upon written information furnished by or on behalf
of the Company or BJI filed in any jurisdiction in order to
qualify the Conversion Shares under the securities or blue sky
laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, the Prospectus
or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make
the statements therein not misleading,
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
24
connection with the marketing of the Conversion Shares, including
without limitation, slides, videos, films and tape recordings, or
(v) any action by any third party in connection with the
transactions contemplated by this Agreement to the extent such
action arises directly or indirectly from the failure of the
Distribution to be made prior to September 30, 1997,
and will reimburse, as incurred, the Purchaser and each such controlling
person for any legal or other expenses reasonably incurred by the Purchaser
or such controlling person in connection with investigating, defending
against or appea ring as a third-party witness in connection with any such
loss, claim, damage liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
in such Registration Statement or any amendment thereto, the Prospectus or
any amendment or supplement thereto, or any Application in reliance upon
and in conformity with written information furnished to the Company by the
Purchaser specifically for use therein. This indemnity agreement will be in
addition to any liability which the Company or BJI may otherwise have.
Neither the Company nor BJI will, without the prior written consent of the
Purchaser, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not the Purchaser
or any person who controls the Purchaser within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of the Purchaser and such controlling
persons from all liability arising out of such claim, action, suit or
proceeding.
(b) The Purchaser will indemnify and hold harmless the Company, BJI
and each of their respective directors, each of their respective officers
who signed the Registration Statement and each person, if any, who controls
the Company or BJI within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities
to which the Company, BJI or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto or the Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, the Prospectus or any
amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Purchaser
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company, BJI or any such
director, officer or controlling person in connection with investigating or
defending any
25
such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability
which the Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 7. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemn ifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both
-------- -------
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be one or more legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that in connection with
such action the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one
action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 7 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in
respect thereof), each indemnifying party, in order to provide for just and
equitable contribution, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative
26
benefits received by the indemnifying party or parties on the one hand and
the indemnified party on the other from the offering of the Conversion
Shares or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also
the relative fault of the indemnifying party or parties on the one hand and
the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative benefits received
by the Company and BJI on the one hand and the Purchaser on the other shall
be deemed to be in the same proportion as the aggregate purchase price of
the Shares, assuming the purchase of all Shares by the Purchaser hereunder,
bears to the aggregate compensation received by the Purchaser pursuant to
Section 3(b)(ii) hereof. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or BJI, on the one hand, or the Purchaser, on the other, the
parties' relative intents, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company, BJI and the
Purchaser agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), the Purchaser shall not be obligated
to make contribution hereunder that in the aggregate exceeds the total
public offering price of the Shares sold to the public by the Purchaser,
less the aggregate amount of any damages that the Purchaser has otherwise
been required to pay in respect of the same or any substantially similar
claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this paragraph (d), each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Purchaser,
and each director of the Company or BJI, each officer of the Company or BJI
who signed the Registration Statement, and each person, if any, who
controls the Company or BJI within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution
as the Company and BJI.
8. Purchase of Securities by Purchaser. The Purchaser may make
-----------------------------------
purchases of Securities in the open market or otherwise at such times, in such
amounts and on such terms as the Purchaser may deem advisable. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Purchaser agrees to
surrender for conversion into Common Stock prior to 6:00 P.M., Eastern time, on
the Expiration Date all Securities purchased by the Purchaser pursuant to the
preceding sentence or otherwise acquired by the Purchaser. Common Stock so
acquired by the Purchaser may be sold at any time or from time to time by the
Purchaser pursuant to the Registration Statement, and the shares of Common Stock
so acquired (excluding, however, any shares of Common Stock acquired upon
conversion of Securities beneficially owned by
27
the Purchaser at the close of business on the day prior to the date of this
Agreement) shall constitute Shares for all purposes hereunder. It is understood
and agreed by the parties that the Purchaser may, subject to applicable law,
make purchases and sales of Common Stock in the open market or otherwise at such
times, in such amounts and on such terms as the Purchaser may deem advisable,
for long or short account, including purchases of Common Stock to cover some or
all of a short position in the Common Stock maintained by the Purchaser, and may
over-allot in arranging sales.
9. Survival. The respective representations, warranties,
--------
agreements, covenants, indemnities and other statements of the Company and BJI,
their respective officers and the Purchaser set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company or BJI, any of their respective officers or directors, the
Purchaser or any controlling person referred to in Section 7 hereof and (ii)
conversion of any Securities and delivery of and payment for any Shares. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 5 and 7 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
10. Termination. (a) Following effectiveness hereof, this
-----------
Agreement may be terminated in the sole discretion of the Purchaser, by notice
to the Company given prior to the Closing Date, in the event that either the
Company or BJI shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on their respective parts to be performed
or satisfied hereunder at or prior thereto or, if at or prior to the Closing
Date,
(i) the Company, BJI or any of their respective subsidiaries
shall have, in the reasonable judgment of the Purchaser,
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding or there
shall have been any material adverse change, or any development
involving a prospective material adverse change (including
without limitation a change in management or control of the
Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and
its subsidiaries taken as a whole, except in each case as
described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by
the Commission or the NYSE or trading in the Securities shall
have been suspended by the Commission or the NYSE or trading in
securities generally on the NYSE shall have been suspended or
minimum or maximum prices shall have been established on such
exchange;
28
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B)
an outbreak or escalation of any other insurrection or armed
conflict involving the United States or (C) any other calamity or
crisis or material adverse change in general economic, political
or financial conditions having an effect on the U. S. financial
markets that, in the sole judgment of the Purchaser, makes it
impractical or inadvisable to proceed with the public offering or
the delivery of the Shares as contemplated by the Registration
Statement, as amended as of the date hereof; or
(v) the Company shall not have obtained an agreement or
agreements from the banks party to the Credit Agreement expressly
permitting the Company to redeem the Securities and to consummate
the transactions contemplated by this Agreement.
(b) Termination of this Agreement pursuant to this Section 10 shall
be without liability of any party to any other party except as provided in
Section 9 hereof.
11. Information Supplied by Purchaser. The statements set forth
---------------------------------
in the last paragraph on the front cover page and under the heading "Standby
Agreement" in the Prospectus (to the extent such statements relate to the
Purchaser) constitute the only information furnished by the Purchaser to the
Company for the purposes of Sections 2(b) and 7 hereof. The Purchaser confirms
that such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Purchaser, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity
Transactions Group; if sent to the Company, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to the Company at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; and if
sent to BJI, shall be delivered or sent by mail, telex or facsimile transmission
and confirmed in writing to BJI at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel.
13. Successors. This Agreement shall inure to the benefit of and
----------
shall be binding upon the Purchaser, the Company, BJI and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company and BJI contained in Section 7 of this Agreement
shall also be for the benefit of any person or persons who control
29
the Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Purchaser contained in Section 7 of
this Agreement shall also be for the benefit of the directors of each of the
Company and BJI, the officers of each of the Company and BJI who have signed the
Registration Statement and any person or persons who control the Company or BJI
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of any Shares or any other shares of Common Stock acquired by the
Purchaser hereunder shall be deemed a successor because of such purchase.
14. Applicable Law. The validity and interpretation of this
--------------
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
15. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
30
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company, BJI and
the Purchaser.
Very truly yours,
WABAN INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
BJ'S WHOLESALE CLUB, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Executive Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
31
SCHEDULE 1
SUBSIDIARIES
Waban Inc. Subsidiaries as of June 6, 1997
------------------------------------------
Name Jurisdiction of Corporation
---- ---------------------------
HomeClub, Inc. Nevada
HomeClub, Inc. of Texas Delaware
Natick Security Corp. Massachusetts
Natick Corporation Delaware
Fullerton Corporation Delaware
Homeclub First Realty Corp. Colorado
HCI Development Corp. California
HCWA Realty Corp. Washington
HBNM Realty Corp. New Mexico
HCCA Realty Corp. California
HBCA 1993 Realty Corp. California
HBOR Realty Corp. Oregon
HBUT Realty Corp. Utah
HCWA 1993 Realty Corp. Washington
HBNM 1994 Realty Corp. New Mexico
HBCO Realty Corp. Colorado
HBCO 1994 Realty Corp. Colorado
HBCA Pomona Realty Corp. California
HBCA Vacaville Realty Corp. California
Natick First Realty Corp. Connecticut
Natick Second Realty Corp. Massachusetts
Natick NJ Flemington Realty Corp. New Jersey
Natick Fourth Realty Corp. New Jersey
Natick Fifth Realty Corp. Maryland
Natick Sixth Realty Corp. Connecticut
Natick NH Realty Corp. New Hampshire
Natick NY Realty Corp. New York
Natick MA Realty Corp. Massachusetts
Natick VA Realty Corp. Virginia
Natick NY 1992 Realty Corp. New York
Natick PA Realty Corp. Pennsylvania
Natick Portsmouth Realty Corp. New Hampshire
Natick NJ Realty Corp. New Jersey
Natick NJ 1993 Realty Corp. New Jersey
Natick CT Realty Corp. Connecticut
BJ's MA Distribution Center, Inc. Massachusetts
BJ's PA Distribution Center, Inc. Pennsylvania
Natick ME 1995 Realty Corp. Maine
Natick NY 1995 Realty Corp. New York
Natick PA 1995 Realty Corp. Pennsylvania
Natick NH 1994 Realty Corp. New Hampshire
Natick MA 1995 Realty Corp. Massachusetts
Natick Lancaster Realty Corp. Pennsylvania
Natick Yorktown Realty Corp. New York
Natick Waterford Realty Corp. Connecticut
Natick ▇▇▇▇▇▇▇ Realty Corp. New York
Natick Bowie Realty Corp. Maryland
Natick Pembroke Realty Corp. Florida
Natick PA Plymouth Realty Corp. Pennsylvania
Natick Realty, Inc. Maryland
BJ's Wholesale Club, Inc. Delaware
Waban Export Inc. Barbados
Mormax Beverages Corp. Delaware
CWC Beverages Corp. Connecticut
FWC Beverages Corp. Florida
JWC Beverages Corp. New Jersey
RWC Beverages Corp. Rhode Island
YWC Beverages Corp. New York
Mormax Corporation Massachusetts
32
